WITH global opportunity for ITES projected at US$ 611.4 billion
by 2005 and given the growth rate of the industry in the country,
India has the potential to address more than a third of the market,
so feels Mr. Ashok Soota, President of the Confederation of
Indian Industry (CII). In an exclusive interview with Amitabha
Sen he said India has to develop a pool of talent conversant
with languages other than English. Countries like Ireland and
Netherlands would have established domain specialization which will
take India a few years more to develop, he pointed out.
AS: India has registered an impressive
70-75 percent growth in ITES business in last one year. How long do
you think this upswing will continue and to sustain this trend or to
register even a higher growth what the Indian ITES sector should
AS: India is emerging as a favoured
destination worldwide for IT enabled services. The country has the
potential of becoming the processing centre for the world. With
global opportunity for ITES projected at US$ 611.4 billion by 2005
and given the growth rate of the industry in the country, India has
the potential to address more than a third of the market. It is
estimated that approximately 100,000 people are employed in the
Indian IT enabled services industry and the number is projected to
reach 1.1 million by 2008.
Accordingly, there is every reason to
believe that the growth wave has only just begun and can continue
for several years.
The major drivers for growth of this
industry are Quality of service, cost reduction and process
efficiency. If these factors are kept at world-class levels, growth
will accelerate even further.
AS: India's major contenders in this
sector seem to be Ireland, Philippines, China, and the Netherlands
among others. Which are the areas where it's Advantage India and
areas where that call Indian ITES companies to pull up their socks?
AS: The key areas of strength for India
as a location for IT enabled services include people skills, cost
advantage and fiscal incentives offered to the industry.
India's success in software services is
also a plus factor over the other countries for growth of ITES.
Managers are already familiar with doing business in India and there
is synergy in the two segments of the industry. Processes for
outsourcing have been streamlined over the years.
India's English speaking graduate pool is
not only the largest, but also the most cost effective compared to
any of the countries mentioned.
The range of service offerings from India
is also the widest.
Where India lags behind other countries is
in a pool of talent conversant with languages other than English;
physical infrastructure including areas like power. Finally,
countries like Ireland and Netherlands would have established domain
specialization which will take India a few years more to develop.
AS: Nasscom forecast ITES revenues to
zoom to US$ 17 billion or Rs. 81,000 crore by 2008 from US$ 1.46 or
Rs. 7100 crore in 2001-02. In other words, India's share in global
ITES market by this time is expected to be over 10 percent. The
employment potential is estimated at 1.5 million. Do you think this
is an achievable target? If so, what could be the basic reasons that
prompt one to come to arrive at such an ambitious target? Besides
what the Indian IETS sector, you think, should do to attain this
AS: As mentioned earlier, the Global
market for BPO and ITES is expected to be around US $ 611 billion by
2005 and India has the potential to address a majority of this
market. India is working extensively towards it.
Continuous enlargement of the talent pool
through education and training will be a key factor. This will
ensure that there is no adverse demand-supply gap for talent and
also ensure that costs remain under control.
India must also step up its marketing
efforts and address the weaknesses mentioned above to open up new
CII is working closely with the Government
and the Industry on all these fronts and results are forthcoming.
AS: Business Process Outsourcing (BPO)
is emerging as a major growth contributor to the ITES sector's
overall growth. How do look at the prospects of this segment? What
would be your suggestions to the Indian companies operating in BPO
segment not only to consolidate but also to expand their business?
AS: This is one of the most exciting
segments within ITES. Some of the major Indian IT service providers
are designing and introducing expanded services to the marketplace
in the BPO area. Some providers have partnered with international
BPO firms while others are developing their own capabilities. Some
of the value added service offerings will be in HR services, finance
and accounting services, indirect procurement services, and shipping
and logistics. Claims Processing and billing for particular vertical
industries like insurance and health care are projected to be the
The most important action for Indian
companies in this area is a vertical industry focus and domain
specialization. BPO represents the high end of the value chain in
ITES and, therefore, industry knowledge including consulting
capability will be key drivers for growth.
AS: In next 3-4 years, it is expected
10-20 world-class players would enter Indian BPO segment. What is
the scope of joint ventures? What message, according to you, entry
of leading global players gives to the Indian players in the field?
AS: This is a very welcome development.
CII is supportive of a competitive environment which will enhance
efficiency of the industry.
The entry of global players will
incentivise Indian players to further enhance their competitiveness.
The concept of joint ventures for
development of this sector is very welcome as a business model. The
JVs can be with end users who see the Business Processes as their
crown jewels and will be more comfortable outsourcing them to a JV
partner. JVs can also be with specialized companies which bring in
domain knowledge not available in India.
AS: Global economy is largely
influenced by the US economy trends. On the other hand, continuous
US war threat to Iraq is causing serious concern. Against this
backdrop, how you rate the near-future prospects of Indian ITES
AS: I agree that global economy is
influenced by US economy trends and to that extent, the war clouds
over the Gulf are casting a shadow. However difficult times are also
times for companies to take difficult decisions. The US companies
faced with cost pressures might look at more outsourcing to India.
This will have a positive impact on the prospects of Indian ITES
sector. Certainly, we have not seen a short-term slowdown caused by